The ups and downs of trying to accumulate a seven-figure net worth on a five-figure salary, loose weight, get fit, and do a post-grad course while working full-time... oh, and train for air pistol competitions ;)

Saturday, 3 February 2007

Land Tax Sux

One of our myriad state taxes is land tax. It's not that I hate land taxes per se, it's just that the state government keeps changing the rules, making it impossible to budget or plan for this tax. For example, our past bills (with no change in the properties we own and pay land tax on) have been:

2005 $1,332.00 $333,000.00 not provided 0.4c per $1 up to $400K, 0.6c per $1 on next $100K, 1.4c per $1 above $500K

* Land used for principal place of residence (ie. our home) is tax exempt

Apart from a short lived attempt to remove the tax threshold (which was repealed after one year due to all the "small" landholders who just had a tiny tax bill due on the land associated with a investment apartment), the rate has been fairly constant but the thresholds were adjusted based on average state property values, whereas land values in Sydney tend to change more erratically, and outpace the threshold increase over time. The government reintroduced the old tax rates and threshold for 2006, but didn't index the threshold in 2006, which has brought our one investment property back over the threshold.

Due to sudden jumps in land valuations under the old method of reviewing land values every 3-4 years, a new method has been introduced that provides a valuation each year, and averages the past three years valuations to smooth out any tax increases.

At least this allows me to make a rough guess of what the land tax bill will be for the next two years, assuminga) rates stay same and threshold goes up 5%pab) land valuation only goes up 5%pa for the next 2 years (due to the property slump)

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